Two care home bosses have been banned from being directors after the savings of vulnerable residents - totalling nearly £60,000 - was lost when the nursing home went bust.

Fresh start: The Abbey Grange care home in Sheffield is now run by new owners

Deepak Mohan Mirpuri and his nephew Arun Mirpuri were appointed 'corporate trustees' of the finances of seven residents in their care who were suffering from dementia or similar conditions, but failed to ringfence their money.

Larongrove Ltd, which ran the Abbey Grange Nursing Home in Sheffield, instead pooled the money for 'working capital' to meet the costs of running the home.

But the business went into administration in August 2009 and the accrued savings - £58,914 paid largely from pension and welfare payouts - were lost.

The Insolvency Service sought bans for Deepak Mohan Mirpuri and Arun Mirpuri from Croydon County Court. They were disqualified from running a company for seven and four years, respectively.

Robert
Clarke, head of company investigations at the Insolvency Service, said:
'Actions which impact upon elderly and vulnerable people in the
community are amongst the most unpleasant.

'Larongrove and its directors
were placed into a position of trust by these seven residents who,
through no fault of their own lacked the capacity to handle their own
finances. They behaved with
an unforgivable lack of responsibility towards the finances of the
elderly people in their care.

'The disqualification orders made in this case send a clear message to
other company directors that if they run a business which causes harm to
the public they will be investigated by the Insolvency Service and
removed from the business environment for a long time.'

The care home has been sold by administrators and is run by the new owners under the same name.

The
Insolvency Service has the power to refer cases to the police, Serious
Fraud Office or Department for Business, Innovation and Skills if it
believes criminal charges could be brought. But it would not comment on
this case.

The financial health of the care home industry has been under scrutiny since the collapse last year of debt-ridden Southern Cross, which had 31,000 residents living in 750 homes.

The industry appears to be heavily weighed down by debts. A study
today revealed UK care home operators now owe £5billion.

The size of the staggering loans,
along with revelations many are linked to offshore firms based as far
away as the Cayman Islands, have emerged as part of an investigation by
the pressure group Corporate Watch.

Massive debts: Concerns have been raised about the financial health of the care home industry

Its study shows three operators that control 800
homes have had their debt marked down as ‘risky’ by agencies that rate
the health of firms.

The rating agencies also highlighted concerns about how these firms could settle their debts.

Three of the largest - Four Seasons, Care UK and NHP - have had their debt rated as 'junk' which means they are risky.

In the wake of its demise the Government promised to legislate on social care to prevent operators taking the same kind of risks that threaten the solvency of such businesses.

Richard Whittell, author of the report said: ‘Not only is there all this debt and financial issues - the structure of all these companies is so complicated with many based offshore it obviously makes it far more difficult for local councils to see what’s going on, as well as people living in the homes.’

The problems affecting the industry stem from local authorities suffering reduced funding and turning to the private sector to build and run the homes.

Around 430,000 disabled and elderly people live in long-term residential care in the UK, but only one in ten are now in council or NHS-run institutions. [Read the full report]